WASHINGTON, DC - JUNE 27: Sen. Tom Harkin, D-IA) (L), and Sen. Jack Reed,(D-RI) look at a chart on student loans during a news conference on Capitol Hill, June 27, 2013 in Washington, DC. The Senators talked about solutions to keep student loans from doubling on July 1st.

What the Stafford Loan Interest Rate Hike Means for Students

Interest rates doubled on new Stafford loans, but that's 'not the end of the world,' one expert says.

WASHINGTON, DC - JUNE 27: Sen. Tom Harkin, D-IA) (L), and Sen. Jack Reed,(D-RI) look at a chart on student loans during a news conference on Capitol Hill, June 27, 2013 in Washington, DC. The Senators talked about solutions to keep student loans from doubling on July 1st.

Interest rates on new Stafford loans jumped Monday after lawmakers failed to reach a deal.

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Most lawmakers agreed that allowing interest rates to double overnight was not a smart path. What they could not agree on was an alternative.

While the economy is rebounding, students are still struggling, and allowing the interest rate increase to stand will only further burden recent college graduates, according to Rep. Debbie Wasserman Schultz, D-Fla.

"As our economy continues to recover, the seven million students who rely on these loans to finance their education shouldn't face higher debt as they graduate, start a career or buy a house at a time when interest rates are at historic lows," the congresswoman wrote in a recent op-ed to U.S. News.

[Learn how congressional budget proposals could affect student loans.]

Proposals backed by both Democrats and Republicans are currently circling the halls of Congress. Most of those plans dictate market-based interest rates, which fluctuate similar to home and car loans, but vary on more technical details.

Some speculate that both houses could reach a consensus when they return to work on July 10, making the agreement retroactive. That prospect seems unlikely to Kantrowitz.

"Last I heard they were very far apart," he says. "I think the most likely scenario is it stays at 6.8 percent."

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